January-February 2005

The Cooling Power of Waste Heat

A cogen project fuels cost savings and rebate incentives for a California-based refrigeration operation.

Historically, energy efficiency has not been the number one priority for those who run industrial refrigeration operations. In fact, the Energy Center of Wisconsin calls the refrigeration industry a "giant snowball of waste," where efficiency often takes a backseat to day-to-day production issues. Growing food-distribution operations are challenged to maintain overburdened systems. Obviously, when storing perishable goods there's no room for downtime, so the maintenance staff must simply keep it all working—even if energy waste from inefficient equipment and controls pummels the profit margins.

But to remain competitive in the refrigeration market, a wise approach toward energy use must undoubtedly come to the fore. In truth, the market for distributed energy (DE) and combined heat and power (CHP) projects in the refrigeration industry is well-positioned—particularly in California, the leading state for DE sales volumes. California utility companies and government agencies fuel the DE market with rebates and incentives, while key forces increasingly drive refrigeration operations toward the big benefits of onsite energy production.

Energy cost cutting—as much as a quarter-million dollars in annual savings and a hefty installation cost rebate from the utility company—is the primary incentive behind a new onsite generation and heat-recovery project at the 100,000-ft2 refrigeration operation of Fremont, CA–based Facciola Meat Co. As a supplier of fresh meats, fish, and specialty food products to restaurants, hotels, and institutions, the company's fleet of refrigerated trucks can be seen traveling throughout northern California.

Recently, Facciola consolidated its two locations into one newly expanded, automated facility that ensures fast delivery through computerized ordering, bar code inventory systems, and multiple conveyors that bring boxes right to the route delivery trucks. When planning for the expansion, CEO Bob Facciola considered the viability of various energy sources and systems. He took a look at solar energy first, but didn't find it cost-effective based on its projected return. Next, he examined natural gas, and was eventually referred to Energy and Power Solutions (EPS), a Costa Mesa, CA–based company that takes a turnkey approach to energy- and power-related projects for the refrigeration industry. "EPS handled our project from design through installation," says Facciola, whose concern was getting an organization that would integrate the cogeneration project with his expansion as a whole. "Overall we wanted a design that would give us the energy savings. That was phase one. Phase two is eliminating the potential of any downtime due to a power outage," he says.

Even though the Facciola operation has a minimal boiler and hot-water load, EPS created a cogeneration system that takes full advantage of the waste heat from two 200-kW generators—so much so that it qualified for significant rebates. Its unique design element is the ability to harness waste heat for use in the refrigerant sub-cooling process, a new solution for industrial refrigeration applications—and one that nets a number of benefits.

Beyond the Electric Bill
By generating its electricity onsite, Facciola will save as much as $252,064 annually. Even beyond the electric bill there are other key benefits. "Perhaps one of the biggest benefits is that cogeneration works for a refrigeration facility such as this. Most typical cogen customers are those with a big boiler or hot-water load," says Staffan Akerstrom, EPS vice president of development. "The Facciola operation has a substantial electrical load due to its refrigeration system, but has a small, intermittent boiler load. So some developers might avoid cogen in this case, as they may not understand how to create a good use for the waste heat," he says, adding that EPS has expertise in refrigeration as well as cogeneration. "We understand both sides—not only making the power, but also using the waste heat in an area where others may be hesitant to venture."

By finding a way to use this waste heat fully, the Facciola operation qualifies for rebates from the California Energy Commission (CEC), which are administered by Pacific Gas & Electric (PG&E). The current program will allow a generator to receive up to $1 a watt for up to 30% of the installed cost of a project. "To get that rebate, we had to demonstrate to the utility company that our waste-heat recovery system would meet their high-efficiency requirements after it was operational," says John Woodman, EPS director of energy management. "With such a small hot-water need at the plant, where could this waste heat go? How could we fully utilize it? By using the waste heat for refrigerant sub-cooling, we brought a unique solution to the table and overcame the challenge. We estimated that the heat recovery and the use of absorption chillers would reduce the electric load consumption by up to 100 kilowatts, and that is what qualifies the project for the self-generation incentive funding."

Woodman explains that the waste heat from the two 200-kW generators is used to make the hot water that drives a 60-ton absorption chiller, which then makes the 42°F water used in refrigerant sub-cooling. If the refrigerant load cycle is low, the excess capacity in the system will generate the hot water required for a clean-in-place process. EPS provided the design, engineering, and installation of the mechanical components and piping necessary to provide sub-cooling to the refrigeration system compressors to achieve up to 60 tons of refrigerant sub-cooling load. The installation also includes a hot-water heat exchanger that makes hot water available to the plant for sanitation and other site needs, and a backup boiler that can provide a backup source of hot water should the generator be down for any reason. In short, he says, the strategy will maximize the annual savings and minimize the capital cost incurred during the facility expansion by achieving the following:

Reduced gas and electric consumption. Implementing heat recovery with onsite generation will reduce electricity consumption by almost 700,000 kWh/yr and 750,000 Btu/hr of gas than would be required without employing a CHP project. The 400-kW generator package is able to generate almost 2,000,000 Btu/hr of waste heat. The waste heat is used to generate as much as 60 tons of chilled water and approximately 750,000 Btu/hr of hot water.

Avoided capital outlay. Combining heat recovery with onsite generation eliminated the need to install additional compressor capacity. Also, a primary boiler for making cleanup water is not required.

Reliability. Regardless of how the future electricity market evolves, the addition of two new 200-kW generators onsite enables the facility to continue critical operations even if the utility is unable to deliver electricity to the facility for a period of time.

The Financial Foundation
"With any onsite generation project, it's important that the project owner understands the financial parameters and the return on investment," says Akerstrom, who adds that there are risks that owners assume with the commitment to generate their own electricity. "There is an expected savings of annual electricity costs that the owner anticipates will occur, yet the savings depend upon the following key factors—that natural gas prices remain reasonably stable, electricity rates per kilowatt-hour from the utility remain at their present levels or continue upward, and that the operation and maintenance costs of the installed generators are within the anticipated price ranges. To be considered a wise investment, the savings are expected to pay back the initial capital contribution within a defined period of time."

As shown in Table 1, a simple payback, life cycle cost, and IRR analysis was done for the Facciola project using the load factor and the kilowatt-hours generated by the equipment.

In addition to all piping, conduit, and electrical components required, the cogeneration installation involved a capital investment that includes the following pieces of equipment:

·                Two 200-kW gensets with outdoor-rated, sound-attenuated enclosures

·                One cogeneration unit control system that controls both units

·                One structural steel skid

·                Two intercooler chillers

·                One hot-water heat exchanger

·                One backup boiler

·                One 60-ton absorption chiller

·                One 175-ton cooling tower

·                Three hot-water and chilled-water pumps

·                One engine-to-hot-water heat exchanger

·                Four refrigerant sub-cooling heat exchangers

·                One electrical switchgear panel with motor controls

EPS designed the Facciola cogeneration project to be baseloaded on the electrical and thermal sides to ensure the quickest payback and the greatest possible reliability. Engines sized to meet a 400-kW continuous-duty load were chosen to best maximize capital. The facility will also gain improved reliability by having two generators producing 400 kW of electricity and waste heat, rather than one.

Akerstrom also points to the fact that there are a number of parameters that affect annual savings and operating costs. Consequently, he says, EPS considered how the following specific factors would influence the Facciola cogeneration project:

Heat rate. Rated as Btus per kilowatt-hour, the heat rate is the measure of natural gas (Btu) used to generate each kilowatt-hour. The higher the heat rate, the higher the operating cost.

Natural gas cost. EPS has secured a three-year contract for Facciola at a fixed rate of an approximately $0.45 per therm, which is up to $0.15 below market price. The owner was able to take advantage of a "subsidized gas rate" or "cogen gas rate," which is another attractive incentive.

Maintenance and warranty cost. Each unit has a specific maintenance cost that is quoted by the equipment manufacturer at $0.015 per kilowatt-hour.

Capital costs. Since Facciola self-funded its project, the cost of capital was not factored into the calculations. However, EPS says that the cost of capital for this alternate technology is low.

Standby cost. PG&E requires standby charges to remain interconnected to the grid. The standby charge is based on the installed capacity; the charges for the Facciola installation, however, are exempt through 2011.

Equipment sizing. By installing a smaller generator, the Facciola facility is guaranteed to operate the generator at full capacity. As the size of the generator increases, it is less likely to run at full speed. EPS modeled the generator behavior each hour in Table 2, which shows that the existing site load only reaches 547 kW for 228 hours out of each year, or only 2.6% of all hours. By applying the 36% load growth due to the plant expansion, the peak sizing grows from 547 kW to 744 kW as shown.

Turnkey Advocacy
EPS says that it employs a turnkey approach similar to that of design/build construction contracting. In other words, EPS becomes an energy advocate, one that ensures value, vendor-neutral decision making, and a maximum return. From design and bid through construction and into operation, the energy advocate fills voids regarding feasibility studies, designing, accounting, financing, estimating, legal ramifications, environmental issues, utility company interface, and more. The project owner then becomes an informed buyer who is aware of all costs, scheduling, and alternatives.

EPS also assists the project owner in maximizing rebate recovery. Rebates can significantly reduce a project's simple payback. Says EPS, "It's imperative to maximize the incentives for all capital projects while saving the time and money it normally takes to identify, recover, and quantify applicable rebates and incentives."

Rebates from local utilities and government agencies are funded directly by the rates paid for energy. More than $1.5 billion in rebates are allocated annually. These incentive programs change frequently and are difficult to track. For that reason, EPS uses a national database of rebates and incentives that keeps it abreast of current changes in the marketplace. Programs may include incentives to replace older equipment with more energy-efficient equipment, or rebates for new plant construction using methods and equipment that offer energy-efficiency savings over a comparable facility.

For the Facciola project, EPS engineered project modifications that would eventually maximize the potential rebate and increase the project's efficiency by completing a turnkey installation that includes the following:

·                Permitting

·                Site preparation

·                Utility agreements and gas and utility interconnections

·                Cogeneration unit procurement, installation, and plant mechanical interconnection

·                Plant electrical interconnection

·                System startup—testing and commissioning

·                Natural gas procurement

·                Maintenance agreement negotiation

·                Project management, administration, and coordination

It's important to note that any turnkey process, no matter how well coordinated, is not without its share of challenges. But as in the design/build approach, the advantage is having one entity that takes accountability, solving any problems without the hassles of "finger-pointing."

As to energy- and power-related projects, interfacing with the electric utility can be a difficult and time-consuming challenge. As such, EPS says that it continually examines, improves, and simplifies its review process with the utility to keep projects on time and on budget.

One of the most unexpected challenges during the Facciola cogeneration project occurred during the site-preparation phase. "The operation is very close to the San Francisco Bay. Our soil analysis showed that at high tide, the water table is about 4 feet below the surface. So that led to an increased footing design for the foundation," says George Botich, EPS vice president of implementation.

The cogeneration units require a 40-foot by 30-foot pad. "We were constrained in space by the addition of a truck fueling station. We wanted the units to be located as close to the refrigeration area as possible, so we battled to find the perfect configuration for this project, finally locating the units near the existing compressor room," Botich says. Weighing an approximate 60,000 pounds each, the two 200-kW cogeneration units are skid-mounted and required a crane to place them on the pad. EPS scheduled those tasks so that the installation would not impede normal plant operation.

Also, due to noise-abatement issues, the city planning department required the installation of a sound-attenuated wall around the entire project. The wall acts as a visual screen as well, for the intent of neighborhood beautification, Botich says.

Reinventing the System
The economic, regulatory, and electricity supply environment to install onsite generation has never been better, says EPS. As far back as 2002 (a long time ago in high-tech terms), the CEC's report on distributed energy resources stated, "We are at the threshold of reinventing the electric power system."

Referring to refrigeration facility owners, Botich says, "Whether it's installing new systems or accessing a new controls package to optimize their existing equipment, most are very open to discussing what they can do to make their operations more energy efficient. But the idea of cogeneration may be something that is completely new to them, so we work very hard to outline the possible benefits. The fact that the California Public Utilities Commission offers such strong financial incentives to highly efficient cogeneration projects is a strong statement—one that really helps facility owners to get onboard."